Penalties of Filing Late Tax Returns for Companies

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Penalties of Filing Late Tax Returns for Companies

The penalties for filing late tax returns for companies could be quite severe, including a 25% per month fine. Find out about the penalties of filing late tax returns for companies with help from a lifelong educator who truly believes that knowledge is power in this free video clip.

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Hi, my name is Michelle Lafrance with Blanchard-Lafrance Accounting and Tax, and today we're going to discuss penalties of filing late tax return for companies. Penalties are assessed when late filing occurs. For example, with a C corporation the penalties are not severe, however, it may be fined 5% of its unpaid taxes for each month with a maximum of 25% fine. When the return is six months late, the minimum penalty is $135. If there are no taxes due for the C corporation, then they will not have to pay a late fine. With an S corporation, the penalties are severe when late filing occurs. Even if there are no taxes due, the late S corporation will be charged $195 for each month within that 12 month period multiplied by the number of shareholders. In other words, if there are 30 shareholders, it will be multiplied by $195 arriving at a penalty of $5,850. For a limited liability company, it can be taxed as an S corporation, a C corporation or a partnership. If the LLC is taxed as a C corporation, it will not assess any penalties but may be subject to a 5% fine for its unpaid taxes with a maximum of 25% fine. If taxed as an S corporation, it will assess the penalty of $195 for each month multiplied by the number of shareholders. If taxed as a partnership, it will assess a penalty of $195 for each month multiplied by the number of partners for that particular tax year. If you would like more information on penalties for corporations, you can always visit IRS.gov. My name is Michelle Lafrance with Blanchard-Lafrance Accounting and Tax. Talk to you soon.